ICO

The next phase of the fundraising could occur this week, an executive told Bloomberg, on behalf of the company’s blockchain project.

The crypto unit of South Korea’s largest internet conglomerate Kakao Corp will repeat its initial coin offering (ICO) after netting $90 million from investors, Bloomberg reported on Mar. 11.

Klaytn, the blockchain platform which is the responsibility of spin-off firm Ground X, will now seek to raise another $90 million as soon as this week. In December 2018, Kakao had first announced that it was planning to raise around $300 million through Ground X to develop its own token.

According to Jason Han, CEO of Ground X, IDG Capital, Cresendo Equity Partners and Translink Capital were some of the venture capital and private equity funds to participate in the ICO round.

Game developer Wemade Entertainment Co. and Chinese travel agency Zanadu are among the 26 companies that will run their applications on the Klatyn platform. Han also noted that Kakao is considering adding one of its own services to the platform, although this has not been confirmed. He told Bloomberg:

“There’s going to be a wide spectrum of services […] we’re continuing to have conversations with Kakao.”

The company, which currently has 65 employees, also plans to hire more as the launch gets closer. Han noted that the delay in the launch, which was originally scheduled for 2018, has been due to more development needed on the platform.

As Cointelegraph reported, the internet giant managed to circumvent increasingly strict regulatory policies in both South Korea and elsewhere by ensuring its ICO tokens were only available to registered, vetted private investors.

At the time, local media said the company had almost hit its intended initial investment target of $300 million from a range of participants, including a Chinese venture capital firm.

The continued success comes as South Korean lawmakers continually monitor the country’s zero-tolerance policy to ICOs, which became illegal in 2017. Ground X is headquartered in Japan.

Last month, Kakao revealed in its latest earnings statement that expenditure on new technologies, including blockchain, topped $57 million in Q4.

Ever since various token implementations were introduced to the Bitcoin Cash (BCH) network, the infrastructure has been significantly developed in order to advance the BCH-fueled token ecosystem. In the last few weeks, projects like Wormhole and the Simple Ledger Protocol (SLP) have seen a significant amount of token creation, alongside a variety of wallet support […]

The post Token Development Using the Bitcoin Cash Network Kicks Into High Gear appeared first on Bitcoin News.

On Feb. 19, the former CEO of Mt. Gox, Mark Karpeles, gave an interview on the Youtube show “What Bitcoin Did”. In episode 76, Karpeles discussed the platform’s insolvency, Coinlab’s monstrous claim for $16 billion, and Brock Pierce’s attempt to revive the defunct exchange. Also read: Mt Gox Restitution Process Frozen Due to One Man’s […]

The post Mt. Gox CEO Claims the Coinlab and Brock Pierce Deals Never Materialized appeared first on Bitcoin News.

The U.S. Securities and Exchange Commission (SEC) has decided not to impose a penalty on a company that had issued security tokens without its approval and without qualifying for an exemption. The company raised approximately $12.7 million. Also read: SEC Chair Explains Key Upgrades Needed for Bitcoin ETF Approval No Penalty The SEC announced on Wednesday […]

The post Company Evades SEC Penalty Despite Illegally Issuing Security Tokens appeared first on Bitcoin News.

After failing to convince a federal court regarding the nature of Blockvest tokens in the previous hearing, the U.S. Securities and Exchange Commission (SEC) has finally convinced the same judge that these tokens are securities. The agency alleges that the firm and its founder made several false claims regarding their token’s regulatory status. Also read: SEC […]

The post Court Reconsiders Ruling After SEC Proves Tokens Are Securities appeared first on Bitcoin News.

What constitutes a fair coin launch? It’s a question that has had some of the brightest minds and brashest projects in the space debating the best way to kickstart a cryptocurrency. Every crypto, Bitcoin included, has attracted criticism over a distribution schedule that favored early adopters. To date, no other coin has come close to […]

The post Bitcoin Had a Fairer Launch Than Any Altcoin appeared first on Bitcoin News.

Malaysia’s finance minister has announced that the order to regulate cryptocurrencies and initial coin offerings as securities has come into force. Crypto service providers and exchanges are required to obtain authorization from the country’s Securities Commission, which will work with the central bank to ensure compliance. Also read: Indian Supreme Court Moves Crypto Hearing, Community Calls […]

The post Malaysia Starts Regulating Cryptocurrencies Today appeared first on Bitcoin News.

Japan’s top financial regulator has clarified to news.Bitcoin.com its stance on bitcoin exchange-traded funds (ETFs), cryptocurrency derivatives, and upcoming regulatory changes. This follows reports that the agency may be considering approving an ETF that tracks cryptocurrencies. Also read: Indian Supreme Court Moves Crypto Hearing, Community Calls for Positive Regulations Bitcoin ETFs and Derivatives Following recent reports […]

The post Japanese Regulator Clarifies Stance on Bitcoin ETFs and Derivatives appeared first on Bitcoin News.

2018 recorded both the highest point of growth of the ICO market and the most severe downturn since 2017.

Disclaimer: This article does not contain investment advice or recommendations. Every investment and trading move involves risk, you should conduct your own research when making a decision.

The ICO market data is provided by ICObench, based upon the projects’ announcements recorded in ICObench database, which includes over 5,100 ICOs since August 2015.

In 2018, 2,284 initial coin offering (ICOs) reached their conclusion and investors could choose, on average, among 482 token sales opening every day of the year. During 2017, the corresponding values were just 966 and 91 ICOs respectively.

However, the economic results are less impressive: The total amount raised in 2018 was almost $11.4 billion, against little more than $10 billion during 2017, with a mere 13 percent growth.

A balance of the general trend of the ICO market during 2018 is, in fact, double-edged. With ICOs in March 2018 collecting almost $1.75 billion, the first half of the year marked the highest point of growth since the beginning of the upward trend that started in late spring 2017, although June 2017’s data is an anomaly, as seen below. On the other hand, the closing months of the year recorded a radical downturn, such as in November 2018, which brought in just $0.36 billion, making it the worst result since May 2017.

Both trends mirror the volatility of the whole crypto market during 2018, especially of Ether, given that Ethereum is the platform the majority of the ICOs issued on their token, with 84.29 percent of the projects, against 1.25 percent raised on Stellar and 0.55 percent on NEO.

Ether achieved its historical highest price on Jan. 13, 2018 (almost $ 1,352), while the lowest level of the year was touched on between Dec. 14 and 15 (around $84, with a loss of about 94 percent of its value). The ICO market seems to react to the trends of the underlying cryptocurrency in slightly volatile ways. In view of the funds raised, the spread between the picks of March and November 2018 is about 79 percent.

Considering the data from a medium- and long-term perspective, the funds gathered by ICOs at the end of the year are still far above the level at the beginning of 2017. Even considering only the first 15 days of December — the data available as of press time — in January 2017, the capital raised by ICOs amounted to about 1.8 percent of the funds available during the last month of 2018, while Ether capitalization accounted then for about 9 percent of the December 2018 level.

More ICOs, fewer resources

The number of new ICOs listed by ICObench during the year followed the trend already shown before considering the funds raised: March 2018 recorded the highest number of new projects entering the database (528), while the number of incoming ICOs has fallen slightly since the end of the summer, with the lowest recorded figure being in October, when there were 213 new listings. In this case, however, the decrease is less evident than the decline of the amount of capital amassed: Therefore, quite a large number of ICOs are still competing for shrinking resources.

As a result, the average amount of funds collected by a single ICO during 2018 is smaller than during the previous year — $11.52 million, against $24.35 million in 2017. Moreover, the differences in size in terms of the actual results of each ICO remains relevant, even if the divergence between the amount of capital raised by the ICOs decreased, especially with a rise in the average size of the smallest ICOs: The least successful ICO that ended during 2017 with a positive result (more than $1) raised $420, while the worst result for 2018 was $761.

More significantly, the range between the ICOs that can be viewed as being medium-small to large on the basis of the funds gathered lessened, ranging from $1.49 million to $40 million in 2018, while the range was from $1.4 million to $45 million during the previous year.

Deviation from the average values is higher among the projects positioning themselves in the highest ranking, i.e., the 5 percent of the sample of ICOs reaching the largest amount of funding. In this case, 2017’s distribution data was partially distorted by the record achieved by a single project, the new blockchain EOS, which ended its year-long ICO in June that year and gathered almost $4.2 billion — which is, until now, the largest ICO in the history. EOS aside, the 2017’s best performer amassed $258 million, while 2018’s best result was $575 million.

During 2018, the top 5 percent of the sample by capitalization (41 ICOs) accounted for about 31.7 percent of all the funds gathered. Among this leading group, 10 ICOs reached $100 million or more — concentrating about 16 percent of all the capital available in the market during the year. In 2017, the same percentile (21 ICOs) accounted for more than 63 percent of all the funds. However, this data falls to 21.6 percent if EOS’s value is not included in the sample.

ICOs become (a little more) spread worldwide

In 2018, ICO promoters were still choosing to establish their headquarters in a rather small number of countries: At the end of the year, the United States, Singapore and the United Kingdom were the countries hosting the largest number of ICOs since 2015, and these three were also the countries with more new ICOs ending during 2018. In the last year, the U.K. overcame Russia in the general ranking, while Germany reached the eighth position, overtaking Canada and the Netherlands — the latter of which exited the top 10.

Considering the whole sample of ICOs indicating a precise localization in their white papers, the spatial concentration decreased from 2017 to 2018: Today, the 10 countries with the largest number of ICO headquarters account for 59 percent of all the projects launched since 2015 while a year ago, this value was about 75 percent.

Concentration, however, remains very high, as seen in the economic indicators. ICOs hosted by the top 10 countries account for about 78 percent of the capital gathered, and the projects establishing their headquarters in the U.S. alone amassed almost 32 percent of the funds. In 2017, these values were even higher: 90 percent and 61 percent, respectively.

Taking into account the economic data about new projects ending during 2018, the dynamic among countries is similar to the trend in the ranking by hosted ICOs. The rise of Estonia (from 11th in 2017 to seventh one year later) and Lithuania (from 21st to 14th) demonstrates the dynamism of Eastern Europe. Still regarded as a part of the Old Continent, Gibraltar rose by 4 positions (from 15th to 11th), thanks to the activism of the local administrators and businesses in promoting the British overseas territory as a new safe harbor for blockchain-based companies.

Looking to Asia, the decrease in the ranking of mainland China (from 10th to 12th) is compensated for by the stronger rank acquired by Hong Kong, which went from the 12th to the ninth place. Finally, the increasing weight of some Caribbean tax havens — such as the Cayman Islands, which rose from the ninth to sixth position, and the British Virgin Islands, from 29th to eighth — stresses the relevance for ICOs concerning issues such as regulations and taxes.

ICO by industry: A strong core and ascending applications

Considering the distribution of the projects fueled by ICOs during 2018, the industries that attracted most investment are the sectors closer to the development of the core of the blockchain economy: platforms allowing the interaction among networks of users, smart contracts, internet-based products, and other types of infrastructure relating to some IT network environment. These accounted for about 30 percent of the funds gathered during the year.

On the other hand, the fintech sector, which includes both banking and financial investment, amassed $4.4 billion, and new blockchains attracted investment of more than $4.2 billion. However, many of the planned 1,111 new cryptocurrencies didn’t complete their ICOs with an economic success.

Other industries that achieved positive results during 2018 were positioned in the IT sector and included such businesses involved with software, big data or artificial intelligence. However, some relevant investments were aimed at applications in other sectors, such as business-oriented services, with $2.4 billion (7.4 percent) in funds raised, and entertainment- and media-related industries, with $2.1 billion (6.4 percent).

The presence of other sectors further away from IT or high-tech industries is of little significance: Manufacturing accounted for about 1.3 percent, which includes the manufacturing of electronic devices, while projects in businesses based on education or art together weighed in at about 1 percent.

A comparison with 2017’s industry distribution is rather difficult due to the overwhelming weight of EOS’s ICO, as that year, new blockchain enterprises accounted for 40.6 percent of the various sectors. However, it is likely that we can recognize both a stable trend of growth involving core industries and a rising role of some fields of application that are closer to final users.

Raising expectations clash with reality

The sum of all the hard caps (HC) set for the token sales ending during 2018 was five times higher than the target aimed for by ICOs in 2017, with $83 billion against almost $15 billion.

Even stronger was the rise in the planned soft cap (SC) goals. In 2018, these were 12 times the cumulative value planned during 2017, amounting to $13.7 billion in comparison with $1.1 billion in the previous year. As a result, the projects ending during 2018 saw the establishment of a narrower gap between HC and SC than was the case during 2017: Cumulative HC exceeded the lower threshold by six times while the ratio was more than twice that during 2017, which had a cumulative HC set 13 times the amount of the cumulative SC.

In spite of raising expectations, the market didn’t answer to such optimistic figures. The envisaged HC for 2018 was, in fact, 173 percent higher than the actual average market capitalization of Ether during the year. Looking at the actual funds raised, at the end of 2018, ICOs attracted about 23.7 percent of the average value available on the Ethereum ecosystem during the year, while the value with regard to 2017 was more than 47.8 percent.

Considering the total funds raised by the 2018 ICOs that specified both the soft cap and hard cap in their white papers, little more than 11 percent of the cumulative envisaged HC was achieved, while 45.5 percent of the cumulative SC was. During 2017, ICOs reached 17 percent of the hard cap set, and 97 percent of the envisaged soft cap.

The increasing number of projects competing for capital during 2018 represented a strong barrier to entry, as only 43.3 percent of the ICOs could gather at least $1 (compared with 57.6 percent in 2017). However, the performance of the token sales in 2018 that passed the first step was a good deal better than during 2017, as 19.2 percent of the projects at least achieved their soft cap — compared to 9.6 percent a year ago.

In spite of the larger number of ICOs launched during the year, the gap between the total number of token sales ending during 2018 and the few that achieved a hard cap is quite similar to the success funnel recorded during 2017. In the last year, only 6 percent of ICOs were able to achieve their hard cap, while 6.7 percent did so in 2017.

2018 recorded the summit of the rally experienced by the ICO market starting from mid-2017, and a subsequent decreasing phase that seems far from finished as of press time. Little more than five year ago, Mastercoin was the first project using an ICO to finance itself. The ICO market is therefore too young to interpret last year’s data as a first cycle that could repeat itself in the future on a larger scale (such as the many “deaths” of Bitcoin demonstrated) or as a signal of a dramatic change in market perspectives.

As a matter of fact, more and more critics are blaming the reliability of ICOs or some of their typical promotion tools, while attention is now focusing on alternative ways to finance the crypto industry, such as security token offerings (STOs) or other possible traditional investment vehicles.

Even so, the picture at the end of 2018 allows some hope with regard to a recovery of the ICOs’ perspectives: Even after a dramatical downsizing, the market is still larger than at the beginning of the upward trend in 2017, and the fact that a concentration in both localization and industries is decreasing is perhaps a signal of a wider adoption.

Besides, in 2017-18, the “ICO-bonanza” allowed for the birth or development of many businesses, offering the promoters of token sales a wide range of high quality services, from strategic advice to marketing, from legal services to start-up incubators. The industry today is, therefore, more complex, robust and structured than a year ago, and this could be a relevant advantage in terms of promoting the next, more sustainable, wave of growth of the ICO market.

The views expressed here are the author’s own and do not necessarily represent the views of Cointelegraph.com.

The way I see it, investors in 2017 — and specifically in Q4 — wanted to buy Bitcoin (BTC) and Ethereum (ETH) for the sole purpose of exchanging it for specific ICO tokens they wanted to invest in. The buyers of Bitcoin and Ethereum did not want to own Bitcoin or Ethereum. They wanted to buy the newly issued initial coin offering (ICO) tokens, but they needed to buy Bitcoin and Ethereum as a short way to get what they ultimately wanted. The owners of Bitcoin and Ethereum did not want to sell. They were watching the price of their holdings increase, so why would they? They were also believers in Bitcoin and Ethereum. So, in a “bid-ask world,” the price went up.

Then, those startup companies that completed their ICOs became whales, which began — as a group — to unload their tokens in December and January, thereby flipping the dynamic of the huge demand for Bitcoin and Ethereum to all sellers of Bitcoin and Ethereum. After the New Year’s hangover faded, the startups needed to exchange their crypto for fiat in order to pay engineers and build their startups.

Then, it was a run-on-the-bank panic. Pressure from the United States regulators in Q3 and Q4 of 2017 resulted in a slowing and near total halt of ICOs by early 2018. After that, ICOs either stopped or radically slowed. New token issuers began to accept fiat without the need to pass through Ethereum, which killed more demand and left only sellers and “hodlers” and no buyers. In a “bid-ask world,” the market tanked. An interesting dynamic of the current market is that the prices of all cryptocurrencies are highly correlated to each other. Just look at the price of any token on CoinMarketCap, and you will notice a perfect correlation among the prices of most of them. Bitcoin and Ethereum go up and down together, and most other tokens are correlated in the same way. It shouldn’t be that way, but without any banks analyzing and reporting on these startups — the way they do for Apple, Amazon, Microsoft, etc. — that’s the way it is for now. So, Bitcoin can raise or drop the price of your token, but it now appears that gravitational pull works in both directions.

In 2018, something else developed. It became clear that all of these funded ICOs were not diligenced by real tech experienced angels or VCs — they were mostly not tokens you would really want to invest into. Previously, all of these coins were correlated to the rising price of Bitcoin and Ethereum, but now it is dragging them down. They are all correlated, and the big section of the overall market cap is sinking the ‘crypto ship’ in general.

What will happen is that all of these weak startups will eventually be flushed out, and we will be left with some decent and even amazing companies. Today, the consumer retail investors of Southeast Asia and around the world are no longer gambling and throwing cash at the latest ICO to pitch at some blockchain event — or at least not at the volumes of Q4 2017. It used to be 20 percent institutional (VC) investors and 80 percent retail. Now, it’s 80 percent institutional investors, if not more. It makes sense to me that, if strongly branded VCs like a16z, Pantera Capital and 7BC.VC invest into a startup from their wide funnel of investments after conducting VC-grade due diligence, consumer retail investors will want to invest — following the VC’s lead in jurisdictions where this complies with local securities law (or, in the U.S., if the startup filed an S1, Reg A+, etc.).

Now is the time for the arrival of experienced VCs to raise real VC funds, generate large volumes of deal flow, process that deal flow with fully centralized and decentralized teams qualified to conduct proper due diligence, fund the best ones, as well as help these portfolio companies execute and manage investor risk via diversification and portfolio construction. We have seen a return to sane equity funding — and not just for tokens. Investors now own equity and tokens. Some “pure play” decentralized cases require only tokens — but again with real, old-school due diligence — before just throwing money around. We are also seeing a return to market valuations, rather than a team of high school dropouts seeking a $50 million or $100 million pre-money valuation without ever having met a payroll or accomplish any substance prior to getting that kind of valuation.

The new companies to be funded in 2019 — and to be listed in 2019, 2020 and 2021 — will be far better on average than the 2017 cohort, resulting in a rebound in the market. Experienced VC-backed entrepreneurs are now working on blockchain startups, which means the population of management teams has evolved beyond the original Bitcoin anarchists.

Bitcoin itself is resilient, proven by its survival of multiple Mt. Gox-type events and numerous up-and-down cycles. The long-term curve for Bitcoin is up and to the right. After the infamous coins run out of cash and disappear, the market will become much more robust. Many of the managers became delusional due to their experience of traveling the world and completing their ICOs, thinking that BTC and ETH would only go up and up while failing to exchange enough of their crypto for fiat. Not only did they have startup risk, but they foolishly added FX (foreign exchange) risk.

So, the good news is that these weak, never-should-have-been-funded startups will run out of cash sooner than expected, because their crypto is worthless when converted to fiat than they thought at the time they completed their financings. The flushing out of these coins currently weakening the market will drive the market up. Today, startups exchange their crypto into fiat the moment they get it.

I also predict that we will see a few killer startups take off and generate mass adoption, which will bring mainstream users into the crypto world and — in a gravitationally correlated world — this will lift the tide of the entire market. We will probably see some video game become a huge sensation — like Angry Birds — or something that will drive the adoption of a token. I expect to see something else come along that no one ever thought of — like Skype — that everyone begins to use, which will pull huge populations into the crypto world, as the value will just simply be there.

It is imperative that all businesses move onto the blockchain so that no party can tamper with the numbers of how many “widgets” were sold or with who gets paid what. All business, government and health care data should be on the blockchain — and pretty soon, it will be unacceptable without it to enter into a business agreement and trust the other party to tell you how many widgets were sold in China, the U.S. or Africa. Once these business transactions or elections are on the blockchain and no one can tamper with the data, all sides can trust each other. The big picture here is that the market will see a major rally and long-term trend up and to the right.

2019 might be an excellent time to invest in a blockchain-focused VC fund or invest into blockchain startups taking on-board lessons from top-performing VCs that have a strong entrepreneur-experienced investment team with experience in achieving top-quartile venture capital IRR performance and cash-on-cash performance.

Andrew Romans is a Silicon Valley-based venture capitalist at 7BC.VC and Rubicon Venture Capital as well as an author of two top-10 books on Venture Capital on Amazon and Masters of Blockchain.

Since 2018’s cryptocurrency “winter” came into existence, tokens generated via initial coin offerings (ICOs) have severely underperformed their macro cap counterparts, namely Bitcoin (BTC) and Ethereum (ETH). This has led a multitude of projects, who formerly relied upon their ICO-funded war chests, to take drastic measures in a bid to stay afloat. ICO-funded Projects Sell 416,000 Ethereum…

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The latest statistics regarding ICO funding in recent months shows that investors continue to turn away from investing in ICO projects amidst the persisting crypto bear market. The statistics, which were reported in the latest issue of the Diar digital asset newsletter, show that ICO fundraising in November plummeted to the lowest level of 2018. The…

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Local media has reported that the People’s Bank of China (PBOC) has banned security token offerings (STOs). Pan Gongsheng, a deputy governor of the PBOC, has mobilized the same rhetoric used with regard to initial coin offerings (ICOs) in describing STOs, accusing security token offerings of comprising “illegal financial activity.” Also Read: Federal Agents Told This […]

Malaysia’s securities regulator and central bank are to strengthen their scrutiny of initial coin offerings (ICOs) through new rules meant to eliminate issues of unfair trade practices and alleged risk of money laundering and terrorism financing. The Securities Commission Malaysia (SC) and Bank Negara Malaysia (BNM) said they will also tighten regulation in the trade […]

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